From my standpoint I see both sides of this.

On side (A) we have Amazon being a book store dominating public cloud by selling commodity cloud services…

…and on side (B) we have VMware being the leader in enterprise virtualization that prides itself on Best in Class built private clouds.

Hmm… How do you compete with commodity when you’re best in class?

Here’s how my simple brain processes this…

If people are moving to AWS because of low cost (obtained through commodity hardware), yet most vSphere environments are being built on best in class hardware such as Cisco UCS and HP C7000 Blade and Chassis with high-end NetApp or EMC storage, on end-to-end Cisco Nexus Networks. Why is it not obvious what the problem is?

My Rationale:

You don’t need best in class hardware to have a great cloud, AWS and Google have both already proven that.

So the solution must be to build a VMware vCloud on low cost commodity hardware too!

Conclusion:

Why do so many datacenter projects keep buying all this expensive hardware…